Pershing Square issues commentary, sees similiarities with Vemma Nutrition
- Pershing sees significant structural similarities between Herbalife Ltd. (Herbalife) and Vemma Nutrition Company (Vemma), the multilevel marketing company that has been halted and whose assets have been seized by a federal court at the request of the Federal Trade Commission for being an alleged pyramid scheme. The FTCs move to shut down Vemma is reassuring for consumers but should worry Herbalife.
- Pershing: Herbalife is an enormous pyramid scheme and its structure parallels Vemma and other fraudulent companies that the FTC has already shut down, including Fortune Hi-Tech Marketing which was shut down in January 2013. In the case of Vemma, the FTCs complaint concerns many fundamental aspects of Vemmas business that are integral to Herbalifes business model
- Provides an example:
Income claims. Both Herbalife and Vemma seriously misrepresent the potential for income:
* The bottom 93% of Vemma Affiliates earned less than $6,169/year. The FTC alleges: [Vemma] claim[s] affiliates can earn substantial income by enrolling others either as affiliates or as customers, but Vemma focuses on recruitment rather than retail sales of its products to generate this income. The vast majority of participants make no money, and most of them lose money.
* The bottom 94% of Herbalife Sales Leaders earned less than $2,245/year. Herbalife bills itself as the best business opportunity on the face of the earth and promises its recruits vast sums of money, but in reality 89% of distributors receive $0 in gross compensation. In 2014, nearly 2 million members churned through Herbalife. 90% of non-sales leaders fail annually.